Fort Walton Beach Council agenda — 08-18-08 special agenda - budget — reading text

reorganization,reorganization, andand budgetbudget cutscuts resultresult inin savingssavings ofof$ $ 1.1. 4M.4M. - $ - $ 271271 KK- - isis offsetoffset inin AA portionportion ofof thethe savingssavings thethe firstfirst yearyear byby thethe incentiveincentive programprogram payouts.payouts. TheThe numbernumber ofof authorizedauthorized positionspositions isis budgetedbudgeted toto decreasedecrease 7.7. 5% 5% fromfrom 427427 toto 395.395. TheThe numbernumber ofof fundedfunded positionspositions isis budgetedbudgeted toto decrease decrease 5.5. 8%8% fromfrom 414414 CityCity ofof FortFort WaltonWalton Beach,Beach, FLFL City Manager' s Budget Message to 390. Funded full -time equivalent ( FTE) postions total 339. 56 compared to 363. 24 last year, a decrease of 23. 68 FTE' s or 6. 5 %. All position eliminations have been achieved through existing vacancies, attrition, or voluntary separation. a. Eliminations due to attrition — accountant, 2 recreation specialists, library assistant II, museum assistant I,data processing coordinator, accounting technician I, service worker II, wastewater treatment operator, services worker I. b. Eliminations due to frozen /unfunded positions — police sergeant, 8 summer youth workers, equipment mechanic III, 2 service worker II ( no expense savings to the budget as these were not funded in the current year). c. Eliminations due to early retirement and voluntary separation incentive programs — purchasing director, inventory control specialist, police captain, assistant parks supervisor, service worker II. d. Eliminations due to reorganization /budget cuts —staff assistant II, 2 police officers, service worker I, utilities operations manager (incumbent will become city engineer). e. Reduced FTE hours worked —custodial worker 0. 75 to 0. 5, custodial worker 0. 5 to 0. 3, recreation specialist 0. 5 to 0. 3, recreation specialist 0. 38 to 0. 25, library assistant II 1. 0 to 0. 7, library assistant II 1. 0 to 0. 8, museum assistant 0. 8 to 0. 6, accounting technician II 1. 0 to 0. 5. f. Partial year funding — deputy fire chief 6 months ( estimated time to recruit and fill position), greenskeeper 8 months. g. Reclassified positions — senior buyer to purchasing agent, senior staff assistant to neighborhood improvement coordinator, administrative assistant to staff assistant II, senior staff assistant to staff assistant II. Reclassifications do not result in any salary increase. h. Frozen /Unfunded positions —fire prevention captain will remain vacant as a result of the fire union early out retirement and 4 golf greenskeepers will remain vacant as a result of the early retirement incentive. These positions will not be filled until a recovery in revenues is realized. i. New position — conservation program manager; new authorization in lieu of continuing contract with Choctawhatchee Basin Alliance (expense neutral to the budget). Details by department are available on pages 52 -59. State Shared Revenues Estimates for the following state -shared revenues are calculated by the State Legislative Committee on Intergovernmental Relations ( LCIR): local option fuel tax, communication services tax ( CST), municipal revenue sharing, and half -cent sales tax. The City's FY 2007 -08 revenues are coming in lower than LCIR estimates, which have been adjusted downward twice during the year ( in December and March). Consequently, staff is not recommending to budget the full LCIR amount for FY 2008 -09. Staff estimates a $ 30K or 4% reduction in local option fuel tax, an $ 85K or 10% reduction in municipal revenue sharing, and a $ 171 K or 10% reduction in half -cent sales tax. In April 2007 the City received a letter from the Department of Revenue ( DOR) advising an overpayment of $ 1, 666, 858 as the result of an audit of the vendors filing the tax. No further information was received until July 2008, when the City was notified by DOR that various misallocation determinations from audits and voluntary compliance actions would be aggregated. Information from DOR shows a net adjustment of $ 473K for 2008 ( underpayments offset the previously identified overpayment). Although LCIR has estimated CST revenue at $ 1. 464M for FY 2009, only $ 1. 4M is budgeted due to staff's uncertainty about the correctness of the FY 2009 estimate. Staff is budgeting conservatively given that other LCIR- estimated revenues are falling short of FY 2007 -08 estimates and given the $ 2. 1 M swing between initial information indicating a $ 1. 7M shortfall and final information indicating a $ 473K underpayment. Utilities & Fuel Expense Gulf Power, the City's electric utility provider, has requested permission from the Florida Public Services Commission for an 11. 3% rate increase. Gulf Power is the third major utility in Florida to seek a mid -year City of Fort Walton Beach, FL 12- City Manager' s Budget Message fuel adjustment. Even if the increase is approved, Gulf Power will continue to have the lowest rates of major utility providers in the state. The FY 2008 -09 utilities budget — including electric, gas, water, & sewer — is 9% or $ 117,970 more than the prior Fuel Consumption year in anticipation of continued increases in 120 energy costs. 100 The City is experiencing the same rise in fuel so.:: e r K costs as its citizens. Over the past year, the cost of unleaded gasoline has increased 36° 0. 9397 per gallon and the cost of dyed diesel o 40 tt a has increased 74% or $ 0. 7431 per gallon. The FY 2008 -09 budget for fuel expense is 37% or 20 g 158, 310 more than the prior year. Between FY 2002 and FY 2005, fuel use was fairly consistent, ° 2002 2003 2004 2005 2006 2007 2008 est. though there was a shift away from gasoline and Gasoline Diesel 0 trend toward diesel. Since FY 2006 there has been an upward trend in gallons used. The Fire Department added a vehicle to its fleet with the purchase of a rapid response vehicle in FY 2006 to complete the advanced life support program. The Police Department implemented a take -home vehicle policy for patrol officers in FY 2006. Pension Contributions The City is required to maintain its three pension plans in a fiscally sound manner. Investment earnings and employee /employer contributions comprise the plans' income. General employees and police officers contribute 5% of wages and fire personnel contribute 6. 6% of wages into their respective plans. The City's actuaries estimate investment earnings at 8% annually for each plan and estimate annual salary increases as follows: General 5. 4 %, Police 7. 5 %, and Fire 6. 5 %. The City's annual funding contribution is based on these actuarially determined estimates and must be adjusted in future years to make up for any changes from these estimates. For budgeting purposes only, the City's contribution is calculated as a percentage of payroll. This percentage is computed as the annual required contribution amount (ARC) provided by the actuary divided by payroll. Although the City contribution is budgeted as a percentage of payroll, actual contributions are based on the dollar value of the annual required contribution. Budgeted Contribution as % of Payroll 2003 -04 2004 -05 2005 -06 2006 -07 2007 -08 2008 -09 General Employees Plan 7. 0% 6. 8% 8. 385% 14. 9% 14. 726% 15. 672% Police Officers Plan 9. 0% 12. 6% 7. 945% 12. 8% 11. 495% 15. 264% Firefighters Plan 6. 5% 5. 9% 6. 950% 10. 9% 10. 800% 16. 449% The large increase in the City's contributions in FY 2007 was attributable to factors such as: lower than anticipated investment earnings ( smoothed over a five -year period); more plan participants due to the early -out retirement program ( last offered in FY 2006); additional fire personnel ( six new personnel added in FY 2006); and higher than actuarially estimated wage adjustments. The City's contribution to the General Employees plan will remain essentially the same for FY 2008 -09 at 1, 268, 260, but the contribution as a percent of payroll has increased due to reduced payroll as a result of the personnel reductions. The City' s contribution to the Police Officers plan will increase $ 90,289 or 29% in large part to the " frozen" state contribution, which is now a smaller percentage of the total annual payroll. The City's contribution to the Firefighters plan will increase $ 89,821 or 45% due to the 2008 early out retirement program because the City will incur higher retirement benefit expenses and have a lower employee contribution due to new personnel being paid at a lower rate. However, the net effect of higher pension contributions and lower salaries is anticipated to save the City about $ 750K over five years for fire personnel. City of Fort Walton Beach, FL 13- City Manager' s Budget Message i BUDGET ASSUMPTIONS A CHANGES The FY 2008 -09 budget has been prepared based on the direction provided by City Council at the Strategic Planning Session and Budget Policy Meeting. REVENUES (detailed discussion on pages 36 -41) Revenues are estimated at conservative levels to guard against unanticipated economic shifts,